SK hynix posts record revenue and operating profit with an 80% margin in the third quarter as net profit falls 58% from the prior quarter

Record revenue and operating profit

South Korean memory maker SK hynix reported preliminary, unaudited results for the third quarter of 2026 on Oct. 28. Revenue reached 104.6 trillion won, up 328% from 24.4 trillion won a year earlier and up 32% from the previous quarter; it was the first time the company’s quarterly revenue topped 100 trillion won. By CNBC’s conversion, that is about $78.86 billion.

Operating profit rose 632% from a year earlier and 38% from the previous quarter to 83.3 trillion won. The company put its operating margin at 80%, up from 76% in the previous quarter and 47% a year earlier. Revenue and operating profit were both the highest quarterly figures in the company’s history. According to CNBC, LSEG SmartEstimates had called for 98.34 trillion won in revenue and 76.72 trillion won in operating profit, so both beat expectations.

Why net profit fell

Net profit was 39.8 trillion won, a net margin of 38%. Although that is up 216% from a year earlier, it is about 58% lower than the previous quarter’s 93.9 trillion won, so the quarter’s net profit was not a record. According to the earnings call transcript published by Motley Fool, CFO Kim Woo-Hyun said non-operating items included an 11.6 trillion won net foreign exchange loss due to a decline in the exchange rate and 22.9 trillion won in valuation losses on investment assets, bringing net non-operating expenses to 32.6 trillion won.

The balance sheet strengthened. At the end of the quarter, cash and cash equivalents stood at 114.5 trillion won, up 26.5 trillion won from the previous quarter, borrowings fell to 15.8 trillion won and net cash reached 98.7 trillion won.

HBM4 and a shortage expected through 2030

The company said DRAM results were driven by a significant increase in server DDR5 sales while HBM4 shipments began in earnest. HBM, or high-bandwidth memory, is used alongside AI processors to handle large amounts of data; HBM4 is the sixth generation of the technology. According to CNBC, the average selling price of DRAM rose by a high-20s percentage from the previous quarter, and server DDR5 shipments rose more than 40%, as executives said on the call. In NAND, sales of 321-layer TLC eSSDs for data centers grew.

SK hynix said it will ramp its M15X fab in Cheongju to maximum capacity by the end of the year to raise HBM4 output, and it expects HBM4 to surpass the previous-generation HBM3E in both shipment volume and revenue in the fourth quarter. Citing the technical difficulty of leading-edge processes and the long lead time needed to build new fabs, the company expects demand to exceed supply through 2030.

The company has signed long-term agreements (LTAs) with 14 major customers, including leading global cloud providers. They cover more than 50% of its production capacity for 2027 and 2028; prices move with market conditions within a range agreed with each customer, and the contracts typically run five years. With the first phase of its Yongin site entering full-scale operation next year, the company expects investment to rise significantly.

Shareholder returns and market reaction

For 2026, SK hynix plans shareholder returns of about 100 trillion won: at least 30 trillion won in cash dividends and at least 60 trillion won in share buybacks and cancellations, including 40 trillion won announced in August. The board approved a third-quarter cash dividend of 14 trillion won and a new 20 trillion won buyback. The dividend is 20,000 won per share, half of which is a special dividend that shares gains from the company’s investment in Japanese memory maker Kioxia. Of the shares to be bought back, 10 trillion won worth will be canceled, and the remaining roughly 10 trillion won will go toward employee compensation. CEO Kwak Noh-Jung also said the company has discontinued its review of an IPO for its U.S. subsidiary Solidigm, citing financial market conditions.

The stock rose 10.89% to close at 1.49 million won in Seoul. Samsung Electronics gained 9.01% and the Kospi index 6.63% the same day; according to CNBC, the company’s U.S.-listed shares also closed more than 13% higher. Susquehanna analyst Mehdi Hosseini kept his neutral rating on SK hynix and said he preferred Micron and Samsung Electronics.